Charles Cantlay, deputy chairman of reinsurance at Aon, has said underwriters are taking on less risk than usual this year, following the mid-year renewals.
Cantlay said this has contributed to an unprecedented hardening of rates since January, with some lines up by 50%.
He said: "Once the underwriters have reached their aggregates, they are putting their pens down and ceasing to write any new business. They have become more hesitant this year about writing beyond their means as the risk of being downgraded by the rating companies continues to be a serious threat."
He also pointed out that although capital market investors have replenished capital in recent years following mega-catastrophes, they are becoming increasingly wary of the market.
"Investors are becoming more and more nervous and should this season produce another Katrina, we may not see another reloading of the market like in recent years," Cantlay explained.
Cantlay said the industry is likely to continue to experience a 2-tier market, highlighting the increasingly exposed and hardening US wind market, where demand exceeds supply, versus the rest of the world which has much greater reinsurance capacity and softer rates.
